Oil Rises For Second Day Amid Optimism Over Economic Growth in U.S., China
Crude advanced for a second day in New York on expectations fuel demand will climb in the U.S. and China, the world’s largest oil-consuming nations.
Futures gained on forecasts that retail sales probably rose in the U.S. for a second month. China’s oil refiners raised processing runs 7.2 percent in August from a year earlier. Prices advanced the most in six weeks on Sept. 10 as China increased imports of crude and after a pipeline that carries Canadian oil to refineries in the U.S. Midwest was shut.
“It’s that optimism in the market” driving prices higher, said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “The data out of China was quite supportive. The whole world is looking for a means to create confidence. As result of that being created you’ll see more demand, or an expectation for more consumption of oil.”
Crude for October delivery rose as much as 88 cents, or 1.2 percent, to $77.33 a barrel in electronic trading on the New York Mercantile Exchange. It was at $77.17 at 2:02 p.m. Singapore time. On Sept. 10, the contract gained $2.20, or 3 percent, to $76.45, the highest settlement since Aug. 11. Futures have declined 2.7 percent this year.
U.S. retail sales probably rose 0.3 percent, according to the median estimate from 63 economists surveyed by Bloomberg News before a Commerce Department report tomorrow. This follows a 0.4 percent gain in July.
China’s crude processing climbed to 34.7 million metric tons in August from a year earlier, China Mainland Market Research Co. said today. That’s about 8.2 million barrels a day. Processing reached 35.28 million tons in July.
China, the world’s biggest energy consumer, increased net crude purchases to 20.65 million tons from 18.8 million tons in July, according to preliminary data from the Beijing-based General Administration of Customs on Sept. 10.
Pipeline Leak
Enbridge Energy Partners LP on Sept. 9 shut its Line 6A, part of a pipeline network that can transport 670,000 barrels a day from Canada. The company doesn’t yet have an estimate of when it will restart the system, which sprung a leak near Romeoville, Illinois, spokeswoman Gina Jordan said yesterday. It has drained the oil from the damaged section, the first step toward repairs. Canada is the largest source of U.S. imports, sending 2.2 million barrels a day in June, according to the Energy Department.
Citgo Petroleum Corp. said Sept. 10 it’s seeking alternate oil for its 170,500 barrel-a-day Lemont refinery usually supplied by the pipeline. ConocoPhillips’ Wood River plant and Exxon Mobil Corp.’s Joliet refinery, both in Illinois, along with BP Plc’s Whiting plant in Indiana, are also in the vicinity of the pipeline.
Brent Oil
Brent crude for October settlement on the London-based ICE Futures Europe exchange added as much as 60 cents, or 0.8 percent, to $78.76 a barrel. The contract rose 69 cents, or 0.9 percent, to settle at $78.16 on Sept. 10. It expires Sept. 15.
The premium on later-dated supplies, or the contango, of oil in New York fell after the explosion on speculation inventories at the Cushing, Oklahoma delivery point will be drawn down to make up the losses.
Crude for December delivery was $1.49 a barrel higher than the October contract, dropping from $2.98 on Sept. 9.
“The template for a sharp build in oil supplies at the Hub was set given the carry the market was paying,” energy consultants Schork Group Inc. in Villanova, Pennsylvania, said in a report today. “That proposition is now in doubt should Canadian supplies remain shut out.”
Hedge funds and other large speculators raised bets on gains in oil prices for the first time in five weeks on renewed signs the U.S. economy is recovering from the worst recession since the 1930s.
Net-long positions on the New York Mercantile Exchange climbed 8 percent in the week ended Sept. 7, the first increase since the seven days ended Aug. 3, according to the weekly Commitments of Traders report from the Commodity Futures Trading Commission. The price of crude advanced 2.5 percent on the Nymex last week, the most since July.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net
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